With US savings accounts yielding roughly 0.25% annually, investors need to start looking elsewhere for a return on their money. These stocks not only carry above average yields, but serve as great growth prospects for any buy and hold investors.
Kinder Morgan Energy Partners (KMP) - One of the leading operators of pipeline transportation and energy storage, KMP currently yields 5.6%. Since the January 2010 quarter KMP has raised its dividend 7 out of the last 8 quarters.
Analysis: Kinder Morgan continues to expand operations at a very aggressive pace. For example they announced 5 new CO2 sales contracts during Q1 and expanded their New Jersey ethanol pipeline, linking facilities in both Linden and Carteret. The expansion of their ethanol pipeline increases capacity by 1 million barrels or 12.5%. Morgan Stanley has also resumed coverage on the company, giving it a $90 price target and initialing KMP as an equal weight amongst other MLPs.
Altria Group Inc. (MO) - One of the more diversified companies in the group, Altria is one the leading wine & tobacco makers in the US. Carrying one of the most popular dividends in the DOW 30, MO currently yields 5.2%
Analysis: Investors have certainly been pleased with Altria's dividend; it has been raised it 5 times over the last 16 quarters, most recently in March of this year. The stock has also returned roughly 19% over the last year and has been upgraded by Wells Fargo's Bonnie Herzog to an "outperform." While global regulation and advertising restrictions will continue to impact tobacco stocks, these shares still dole out some of the market's biggest dividends. "Dividend payout for these guys is about 80 percent," she said. "They do grow in line typically with earnings, so I think that's something you can count on."
PPL Corporation (PPL) - One the best dividend and growth stocks in my opinion, PPL yields 5.1% and has surpassed earnings estimates three out of the last four quarters. PPL's P/E ratio of 10.3 makes that stock very cheap and very attractive to long term buy & hold investors.
Analysis: Shareholder returns are a key factor when it comes to PPL. The stock is up 9% over the last year and key developments continue to enhance the company's bottom line. For example, a recent pact with the National Park Service will allow PPL to assist in the preservation and purchase of some of its existing land. Investors should note that PPL restated recent earnings in a positive direction, to the tune of $89 million pre-tax. Why? A favorable US Supreme Court ruling in February regarding several of its PPL Montana properties.
Investors should closely watch the way these companies continue to grow and increase their dividend distributions. Variables such as energy output, natural gas and oil reserves, and environmentally friendly projects will all play key roles moving forward.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
